Aggregated News From Investment Management Regulators

Prime Minister issues some amendments to the provisions of the Executive Regulations of the Capital Market Law regulating real estate investment trust (REITs)

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• Dr. Omran: The amendments included in the ministerial decree aims at facilitating and easing burdens to activate real estate investment trust (REITs)
• Dr. Omran: One or more real estate appraisal experts listed at FRA’s registry shall  valuate assets of real estate investment trust (REITs)

Dr. Mohammed Omran, FRA’s Chairman stressed on FRA’s keenness to develop and activate real estate investment trust (REITs), facilitate their work and reduce their burdens to carry out their activities in order to play their vital role in promoting the construction industry as it is in the international markets.

FRA’s Chairman said ministerial decree no. (1347) of 2019 on amending some provisions of the Executive Regulations of the Capital Market Law stipulated that  Management Services Company  shall conduct periodical valuation of the REITs’  total assets every six months at least (instead of every three months) ). This shall be applied on (REITs) that are not listed at the Stock Exchange in order to reduce the financial burden on the Fund, given the nature of some (REITs)  targeting long-term investment in unlisted real estate assets or securities. Meanwhile, if the Fund is listed at the Stock Exchange, the valuation shall be conducted quarterly.

FRA’s Chairman added that the amendments have taken into account “further facilitation and easing of financial burdens so that the REITs’ assets will be valuated by one or more of the Real Estate Appraisal Experts listed at FRA’s registry – rather than requiring that the valuation be made by two experts – who must be independent of either party. Upon the preparation of the report, real estate appraisers shall abide by the Egyptian Financial valuation Standards issued by FRA’s BOD. The report shall only be sent to the Auditor without interfering with valuation tasks.

Dr. Omran emphasized that the Authority is – currently- in consultation with officials of the Ministry of Finance to prepare some tax incentives to encourage engaging in real estate investments through REITs.

 FRA’s Chairman noted that the amendment was issued to avoid conflicts of interest. In this respect, it was required to obtain the approval of Certificate Holders Group if the  REITs’  funds are directed to any investments or real estate owned directly or indirectly by any related parties by an amount not exceeding (25%) of the Fund’s assets.  In addition, two real estate appraisers who are list at FRA’s registry shall valuate the assets; afterwards Fund’s auditors shall approve the valuation.
 

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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